Correlation Between NMDC Steel and Aptech

Can any of the company-specific risk be diversified away by investing in both NMDC Steel and Aptech at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NMDC Steel and Aptech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NMDC Steel Limited and Aptech Limited, you can compare the effects of market volatilities on NMDC Steel and Aptech and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NMDC Steel with a short position of Aptech. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMDC Steel and Aptech.

Diversification Opportunities for NMDC Steel and Aptech

0.95

Correlation Coefficient

NMDC Steel  Aptech

Almost no diversification

The 3 months correlation between NMDC and Aptech is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding NMDC Steel Limited and Aptech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptech Limited and NMDC Steel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NMDC Steel Limited are associated (or correlated) with Aptech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptech Limited has no effect on the direction of NMDC Steel i.e., NMDC Steel and Aptech go up and down completely randomly.

Pair Corralation between NMDC Steel and Aptech

Assuming the 90 days trading horizon NMDC Steel Limited is expected to generate 0.76 times more return on investment than Aptech. However, NMDC Steel Limited is 1.31 times less risky than Aptech. It trades about -0.12 of its potential returns per unit of risk. Aptech Limited is currently generating about -0.17 per unit of risk. If you would invest  4,464  in NMDC Steel Limited on December 26, 2024 and sell it today you would lose (957.00) from holding NMDC Steel Limited or give up 21.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

NMDC Steel Limited  vs.  Aptech Limited

NMDC Steel Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days NMDC Steel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Aptech Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aptech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with NMDC Steel and Aptech

The main advantage of trading using opposite NMDC Steel and Aptech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMDC Steel position performs unexpectedly, Aptech can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aptech will offset losses from the drop in Aptech's long position.

The idea behind NMDC Steel Limited and Aptech Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.